C*-' ^jtu?pf IK3BW3Mi.L1>)'J?. 1
regulate the depositee of the p'jblio mon-1 f(
ey. j tl
Under the system thus organised, the a
i public r? venue on hand wns deposited in ; w
selected hanks, to he discounted on hv o
them, with various regulations of sectiri- d
IV; the public funds were transferred !?v b
their agency; th*ir notes were received p
and naid out in the dealings of the Treas- n
Ury ; and they were relied on'lo conduct v
the exchanges of the country, and lur- h
llish its paper currency. ; e
At this period. (18dT) the r, ruber of.d
banks chartered bv the several Stales had j
[ ,greatly increased, many being created tor a
-tne alleged purpose of supplying the anti- c
ripnted vacuum in business by reason ol j n
the refusal of a r.ew charter to the United j j:
States Hank; the total number of hanks I
in operation mi the United States being , c
six hundred and seventy-six, with a en pi.' j \
tal of upwards of thr *e hundred and twenty
four millions of dollars. This amount 1
of capital was greatly beyond lite true j
wants of the country ; much of it was fic-.i (
titious; the business was altogether over* ,
*
done; excessive hank issues and over* t
trading followed hand in hand; and at t
length, (in 18*37.^ the whole machinery |
fell into pieces, and a general suspension 1
of cash onvfncnttf by all the banks in the ;'
United Slates occurred.
Thereupon, the President, (Mr. Van (
Keren.) Considering the incorporation of
a national bank unconstitutional, and it*
oonstitutional, yet unwise, and deeming <
liie continued use of the State banks ri- i
thcr impracticable or inexpedient, reeoin- J
mended a radical change in the Hscnl operations
of the Federal Government, which
(with some modifications o' the original
plan) became the law of the land on the
4th of July, 1^40. bv the passage of the |
act to provide tor the collection, safe- !
keeping, transfer, and disbursed!* ut of the
public money. 1
Tiie principle of this plan was the ultimate
total separation of the Federal Government
from all dependence on banks
and batik paper in the business of the
Treasury. The Treasurer of the United i
States, and various officers of the Gov.
eminent under him, were required to keep
the public moneys in f!-:e vaults of the
Government, and perform all the duties
"-"II rt?>r?n*ito. and nrovi
< 1 innuivi us hv-ii , t
sum was mailt; for exacting immediately
oiu<four(h of ail public dims to |>o paid in
gold and silver, and for the addition of
one fourth to that requisition yearly; so
that, on and after the expiration o? three
years, all payments to the Government
should he made :n gold and silver onlv,
C -
as the sole and exclusive legal currency j
of the United States.
This act continued in force onlv one
year, being repealed by th" act of 1M1,
which threw b.ck- the business of the
Treasury on the provisions of the resolution
of 19MJ,. and tlie original act establishing
tho Treasury Department, where
it now stands.
And thus, by the vicissitudes of opinion
and of party, and the successive rejection
of the plan of a Rank of the United
States, that of deposite in S ate Ranks,
and of the independent Treasury, Congress
is invited and required to examine i
the whole subject anew, free from all ini- |
pediments of existing law, and to settle it |
on the principles of justice and general '
expediency, und the letter and spirit of
the Constitution. !
J.n all times and all countries, under eve-'
" * ' t
rv lorm or insuiimons ami
mn of society. the smne common queslion
of the public revenue.?how be*t il
shall be collected, guarded, and disbursed;
in *what form and on what objects of taxation
it shall be levied : in what material
it shall be received pnri paid out ; its enstodv
in the interval between the time of
collection and that of disbursement; its ;
transmission, and the description and
combination of agents or ofli crs by whom
an these operations shall be performed,?
has never ceased to he one of the most
perplexing problems of Government.
Everv wise Governo ent, whatever
may he the source or tenure of its power,
will, of course, in the solution of ihi>
problem, aim to reconcile its own interfhiB
with those of the community it gov?rrts.
If it be a constitutional government,
established nnd existing only by ihe
consent of the governed, its functions
are nothing but a high trjst to be exerciser!
for theii advantage. I fit he a despotic
government, holding its po.v:rh\
Wee or prescription, still iti own greatness
is inseparably connected with the welfare
and prosperity of those* whom it rules, and
the extent of its own pecunraiy resources
depends upon theirs.
The question, therefore, heroines com
plicated at once, by I ho dutv Government'
lies tinder, of considering, no only what
?> convenient for itself in a merely 1is< j 1
point of view, but ulint, compatibly with
that great exigency, will most promote,
or at all events least impair, the produclive
industry and social well-being of the
community at large, in nil private rela
fions. To the combination of these two
primary objects it should look in the collection
of its revenues, and to the same
in their custody, transmission, and disbursement.
Whatever course of policy Government
may choose to adopt in these respects, it
? -\U
must, m| necessity, ns too inuispensau'*condition
precedent of any regular system
o} measures, fix a money-standard,
or rwensnre ot value, for the regulation of
ttll Coalings between itself and the com
mtinity, unless it receive every thing in
kind, and nay ?'it the same. Even then,
?t must havC some sert of measure of value
j otherwise all taxation wiil be arbitrary,
tynequnl, and oppressive. It is convenient
tb?H the standard of value between
Msnlf^nd the community shall, if possible
Ihi the same as that between the individi
. ~ L A/.mnniirt' tr t I u? nuol VP?J 171
UHIH "1 me
tlldr^o mutual dealings. It is, moreover,
in olher relations, a proper function
t>f jjmcrRrrjent, for thesajve of uniformity.
*
jr the prevention of disputes, and for I
he execution of the laws between man I
nd man, to prescribe the measure by
-hicb the value of property, the exchange j <
- ? "'I 't>" onllwctinn of i
if coinmoouus. uiiu mo -- .
cbts, shall ! ? regulated.* Unless there I
o such a fixed standard of value, the j
roportv and the labor of all are at the h
ncrcv of the government and\ol_ indj. t
iduals. Hence the uuivc75!fK&?ff^WB|
>v all civilized governments, of the |?owr
to coin money, and assign to it a stan- ;
!ard denomination of value.
If it were possible to discover or devise
nv substance or thing, of the same uii:han?reable
quantity and value at all times
nd places, imperishable, safe, portable,
orfeelly convenient, indefinitely divisi
le, and upon which neither time nor man
'ould act to its injury or abuse, that ]
vonld he the true money-standard.
In the adop'ion, amongst nearly all civil-J
zed nations, tmin the earliest period*, of goid !
md <i ver as tlie money standard, maiik-nd j
rave but selected that which, by the common j
;on.?ent of all, approached ilie near*'*! m i" .
]'ialifio!* to the thing r?Mjuir?*/l. The use of |
be precious mcta s, in tins way, resulted from
[heir intrinsic adaptation to that use ; and |
Uovprnmerits only added the legal rate of val. j
jp, and the stamp or certificate of purity and ;
jpitt nunati'.n, for convenience in counting,!
and in passing from hand to hand.
But ihe preci ajs metals themselves, in ad- j
dition to their uses for coin, are likewise, whotfr
r co net' or uncoined, a coininodi:y, or
article of production, con-mrnptioii, and merchandise.
.Themselves are a part of that
general property of the community of all the
rest of w nch they am the measure ; and they |
are of actual value, different in different ?
p! tees, according to lite contingencies of gov- J
eminent, or commerce. Their aggregate (
qnariiilv is subject to be di ninished bv casual
destruction or a!?so ntion in the arts of inanufacun?,
or to he diminish *d or augmented by
the grt-aier or less number or productiveness
of mines, and thus their aggregate vane relatively
to other commodities is liable to perpetual
change. The n il i-nc.o of these facts
Upon prices, upon pu lie affairs, and upon
commerce, is visible i,t all the financial history
of odern times.
B 'sides which, corn is subject to debasenn
nt, or to he made a I' gil tender at a rate
exceeding its actual value, by the arbitrary
act of the government which controls its coin,
age and prescribes its legal value. In tunes,
when the uses of a p iper currency, and of
public stocks, were not un !er.-too<l or not
practiced, and communities had n t begun to
resort to a piper symbol or nominal represen.
tative of money capable of being fabricated
at will, the adulteration o> coin instead of it
was, il is well known, the freq tent expedient
of public iiecee-siiv or public cupidi'y to muawi
relief Irom some proving pecuniary embarrassment.
.Moreover, the precious metals, though of
loss hulk in proportion to ihoir value than
most other coirvn clitics, yet cannot be transported
from place to p ace, without cost and
r.slc ; com is s ibject to he sto'en o- lost, and
in 'hat case cannot e isdv he identified so as to
b.r reclaimed . the continual counting of it in
large su us is iiiconveii cut; it wouIJ be unsafe,
and would cause much money to remain
idle and unfruitful, if eve v merchant kept
constantly on hand a sum of coin fur a It his
transactions ; and the displacement of large
amounts of coin, its transfer from one commu.
nity or one country to another, is liable to
occasion fluctuations in the value of property
and labor, and to embarrass commercial
operations. ,4nd tlmre is no necessity that,
for each and every commercial transaction
b twoen two individuals or two communities;
there should be a transfer of coin from one to
the otner to make pavin nt therefor. The
mutual dealings of all the members ol a community,
or of two separate communities, will,
to a cer'ain degree, produce a stale of reciprocal
indebtedness, the indebtedness of the
one b dancing more or le*s tint of the othpr,
ami ihe ex> e>s only of which needs to he paid
in coin. Jud to release individuals and governuvmts
f*om :|?e inconveniences attending
the cont nual personal custody ami handling,
a d ihe unnece-safv tran-'por ation of specie
from one place to another, lulls of exchange
banks and other establishments f-?r dealing in
bids and money, and receiving money in de?
posite, and fof the adjus'mcntmf commercial
and other accounts bv bank crc.J''s, checks,
and bi Is, came imo use, and became fixed 111.
gredients in all the m uiotary uperatiuntJ of
the modern civilized world.
Bills of exchange, it is obvious, though
i pcrforin ng tl?e fuociioii-t of a medium of exchange
iike mo cy, are not men y. They are,
tor the most part, and in their proper use, only
the representatives of the money or.o; the
vi.lup of the merchandise on winch they are
drawn ; and in this resjvet they are of such
universally admitted utility as to render certain
their continued employment in the business
of society.
B ink credits, checks, or hi!!*, though they
ai*-o perlortn some of the functions of money,
and constitute a cncuiatitig currency are no)
ii?i >
- -.i ..... wi-.? nr/\m c r? < m
money. i ney jdro nuuiui^ uui pi V/l liiwv u ?*?
older* for the payment of money .tse< rJiug to
their tenor. j4nd whilst paper, actually am
fiuy re eernable in coin on urmand, is no!
money, etill Jcfs is that paper in anv sense
: money which, whether professedly or not, i?.
| yet in point of fact a >t redeemable in eo:n 01
; demand.
Bink pnper, if it stand nn a so1 id cp.-rio basis,
lias circulation Uiy reason of its ennven
ience, and its being therefore pre ferred to th?
coin itself. Tins preference may continue V
exist so as to have the effect of l;e 'ping sus;
ponded 111 circulation atalltirms a crruii
' quantity of the paper, and to free the ban!
from the necessity of retaining always 01
^ hand an amount o! specie equal tn the ainoun
j of uaper issued. And thus a clioap nudum
of circulation is supplied in place of a dear one
. And if the redemption of its biils be conlinual!
ly eulorccd, and the prudence of its conduc
I incessantly tested and si-cured, the oporalinj
. is a usefu one to the community as well as ;
1 profitable one to the bank.
\ 15ut in this way tho hank acquires tin
j faculty, not indeed of creating value, hu
I of creating at w ill that which command'
f yahte. It is tempted hy the cupidity o
J oHit* to expand its issues. Tile redeem
j abilitv in coin set forth on the face of if
' paper comes to he a fiction or a falsehood
! if the Government of the country see fi
I - - ?
! to permit this operation to go on, or th<
people iundvortonlly acquiesce in it, thi
gradual expansion of the Currency stimu
| fates to an artificial excitement in busi
ness; property rises in nominal value
' i it is quickly exchanged for that whirl
j has no intrinsic value; ?rul every thin/
'j wears the aspect of high prosperity, unti
the bubble of inflated paper cireulaliot
1 1 hursts, throw ing all the currency in'o con
' fusion, suddenly reducing prices, anesiin^
business, and filling the community with ' r
bankruptcy and di>tress. ! <
Hence, if it he needful to legislate I
- 1 -* 1 i - r .. i l
concerning tlie eoineu ManiiHr;i 01 vaiuc, r
it is equally, and for the same reasons, r
needful to legislate concerning that which fc
takes its place, perforins its functions, i
augments its nominal quantity, affects its t
fc&lne, and acts potentially on all the rala- c
j'Wfcbor and property. 11"is idle to i
forbid individuals to coin money, if they '
be left to make at will that which usurps I
all the uses of money. And, accordingly, I
in those countries where the issue of pa- i
per to circulate as money exists, it exists | i
by permission and under regulation of I
Government. j <
And it speedily becomes a government ;
question in another anil a still more im- |
porlant point of view. To issue pnper i <
having currency as money, is in fact to j
borrow money, am! command commercial '
values at will. Why, then, should indi- ;
viduuls or corporations have the exclusive
enjoyment of this wealth creating power?
Why should not Government itself,
participate in it, or take it to itself? It j
has clone so. By the issu^^hilis of crcd- ;
it or assign.i has, unc^yffe pressure
of war and foreign in^Wl^mh.sorbed all
the labor and property o^^^^^mmunitv j
There is no difference be- i
tween hills not redeemable in specie, issued
bv the Government for circulation ns j
currency, and similar bills issued in the ;
same way by corporations or by individu
als, except that Government may have
the power to make thorn a forced legal
tender. Nor is it material, if they ho !
not actually redeemable in specie, whether
they be issued on faith and credit ;
: only, like the common promissory notes j
, of individuals, or whether thev he nomi-.j
nally secured by the pledge of lands or,}
effects set apart for their redemption. In j
j either case, such hills constitute an act of;
borrowing, not an omission of mnnri/. In t:
both cases the course of things is the .
' samo, whe ther tliev he issued on public ;
or private responsibility. They continue '
i to have cuirency as money, so long as, j
i from ignorance, inadvertence, or nccassi- 1
ty, men voluntarily receive them. But, ;
i under the most favorable circumstances
possible, and when such hills are issued 1
noon the highest conceivable credit, and
I .7
though governments inculcate, and communities
believe, that the bills are equal
i in value to coin, still they speedily begin
! to undergo a gradual depreciation, itidi- j
| rated in the rise of the comparative price J
| of the precious metals. And, in general, j
i of all such issues the fate is the same, a !
j depreciation in value to a greater or less !
i extent, sometimes absolutely to nothing, j
| having the effect to impose and levy a i
I tax on the community, to abstract from it
] property or labor without compensation,
nearly to the totti amount of such deprej
ciation.
i There have heen, and may cncc more j
i he, occasions imposing upon Government
I the indispensable necessity of resorting to
| such means of obtaining resources as the
only possible ones to maintain its iade;
pendence or existence. In such eases,
i Government, representing the political
j unity and wielding the physical force of
; the nation, has the right to take the prop;
erty or the labor of individuals for the sal|
vation of all, and the question of the form
of taxation in which th's shall bo done,
whether by the forced course of a paper
i currency, or otherwise, may be reduced
to a mere problem of expediency or praci
ticabihtv. Hut. in every such operation,
the premises are a case of overwhelming
public necessity.
But there can he no sm*h consecrations
to justify governments in allowing
I !
| private individuals or corporations to is
i sue irredeemable hills to circulate as inor?'
ev, and thus to extort a tax from the com1
mmiity, for the purposes of mere private
gain. It is conceded that individuals
ought not to adulterate the coin, or falsify
J its denomination ; for which reason the
i coin is placed under the safeguard of the
public authority. The reason is greater
for subjecting the issues of paper currency
to public authority, because the extent
of the possible evil is greater, and the na?
tore of the effect on private rights and
interests is in both cases substantially the
same.
' In addition to which, of all these di.
verse forms of paper currency not re,
| demrialdc in specie on demand, the inhe|
rent and (so far as yet shown) the
t: incurable vice is a" tendency to excess of
; ! issues, a fatal facility in the creation of
! i what is called and received as money,
1 ; which seems to ntford all hut irresistible
temptation to the cupidity of individuals
] and of governments. This is apparent in
? ; regard to all paper currency, of whatever
- I o ^ .
) description, and wheresoever it originates,
- which does not undertake to bo redeoma1
j hie in coin.
And the position is not less true in
( ! principle of tliat otber form of paper cur.
, roncv, which professes to be redeemable
! in coin on presentation, which is intended
- so to he, hut for which, the coin is not
t actually kept on hand, in the confidence
1 that a certain quantity of the paper will
* I be held suspended in circulation by the
| wants of the community, as in the case ol
( | the hills of what are commonly called
specie-paying banks. The persons issu/.j
irg this may err in judgment as to the
i capacity of the market to hold it in cireolation;
a temporary and unnatural ca
i parity of the market in this respect ma\
| he suddenly followed by a constriction ol
it which they could not foresee in season
g ! *
or they may, in (he pursuit of gain, extenr
; their circulation by artificial means to thf
certain prejudice of the community. Th<
true and efficient cheek to this excess o
' issues, whether the excess be wilful or ae
cidental, is the rigorous enforcement o
" nivmcn! of the hills in coin, at all haz
J | K'V i
ards. and bv I he full power of the Gov
i . ' 1
ernmenf.
" | Without (hi*, the evils of a paper cur
9
ency are creator than its benefits. For j 1
tne of the advantages of metallic money I <
s its comparative stability in value, it [ J
waving a natural price, measured by the j '
est of production. Hut paper currency j
no intrinsic value ; it is susceptible of I |
lumitablc aiigmentatinnju) quantity; nnd
he amount of it, which may be held in <
irculation at a eiven moment, depends I.J
.? i 1 i
n pare on me unpeg huu ? ,
nerr, and the extent of business which (
they may thus he prompted to undertake, j1
Hence the injurious Jluc'ualioiis to which j
s. paper currency is subject. Perpetual j
redeemability in coin is at once the check i
to, and the partial remedy for, this disease
of a paper circulation.
For, he it still remembered, that, in .
the opinion of the best and most experi- j
cneed writers, the issue of a paper cur- !
renrv is not the creation ofmonoy; nnd j
it is most perfect when no more than j
equal in amount in n given country to |
what the currency of that country would j
he if it consisted only of gold and sil- '
vcr.
Governments have generally seen that j
the faculty ofissuiug a paper circulation j
as money should not Le concedyd toper- j
sons engaged ?n the business of trade; j
for if it worn, issuing hills at discretion |
tliny might r-ngross directly an indefinite I
amount of the property of the communi- j
ty. Accordingly, the privilege has usu- !
ally, been granted only to persons or
companies engaged in the business of J
lending money. Hut the persons consli- j
toting the company, or controlling its af- j
fairs, mnv themselves be borrowers, and j
then the restriction becomes a nugatory
one; for-in that caso thev create a eurrcn- j
cy to use it in trade themselves, which is
not the least frequent cause of excessive |
hank issues, and has led to the opinion, j
entertained now hv many, that inasmuch ,
as the business of trading and of issuing j
a paper currency sho-ukl he separated, for j
the same reason that of lending money!
and of issuing a paper currency ought not
to he entrusted to the same hanks.
In case, however, the Government it- j
self be a borrower, and docs not chose)
to issue a paper of its own to circulate as
money, it may and often does, attain the !
same end by the establishment of a bank ,
of issues, for the very purpose of a rang, j
ing its debts 01 anticipating its revenues. !
ficncc the origin, in many cases, of the
direct association between governments
and hanks.
So that in all communities, and in everv
form in which currency exists, wheth
ar coined money oras piper representative (
of it, and whether this be issued bv hanks !
or by public authority directly, the que*. !
(ion of the currency of the country and
that of its fiscal affairs are inseparable
facts.
And next to taxation itself, the question
of the material in which taxes shall be
levied whether in kind or an cquiv.
alent, and if so, whether in coin or not,
is the most important of all. The queslion
of the place and agent of deposilo or
transmission, is one of convenience, sccu.
| rity, or use; that of the standard and ma
terial of payment is one of the substance
of the thin?.
j O
These general icsults, applicable to nil
systems of finance, are derived from
the common experience of Europe and
America. In the United States the ap.
plication of them depends on the peculiar
form and organization of our Government.
Our political institutions are the work
of compact and consent. To the Fedelal
Government belongs all such legislative
and administrative powers, and such only,
| a3 the Constitution defines; all functions
I A _
of Government not thereby granted to
j the Union, remaining to the separate
Stales or to the People thereof, and the
J States themselves possessing many of the
i substantive powers of political sovereign!
fyr
| Among (he suhstantrve poweis of poI
liticul sovereignty exercised (whether
! rightfully or not) l?v each of the States, is
; that of authorizing and regulating, by
1 means of chartered instruments of their
{ own, the issue of bank paper to circulate
; as currency.
The (acuity of issuing paper to circulate
as currency is no more a ne cessary
! incident of the faculty to receive money
in deposite, and to loan it in the discount
. of holes and purchase of bills, than it is a
, necessary incident of the faculty to buy
and sell merchandise. A bank having
authority to issue fulls, after purchasing
'i hills with (that is, loaning out) the whole
of its capital, proceeds to purchase othei
bill's with its own promises to pap. Thus
it does more business than if rigidly con
fined to its capital it could, and makes nr
: interest on its own credit or promises, as
well as on its capital. The real opera
tion would be the same if a merchant hat
the same authority. Yet, by the prac
fice in the United States, (not so general
?* -li!_
!v in other countries,) the two laconic?
i ! of loaning money and of issuing a cur
rencv are conjoined in the banks of the
J State*.
f J It may well he doubted whether tin
I i h lis so issued by the banks of the States
i ' and constituting a currency, are not hill:
r: of credit within the meaning of the j?ro
1 1 hibition of the Constitution.
, J Historically, it is demonstrable that tlx
; | expression ''bills of credit' applied, in n!
. ! the period anterioc to the adoption of th<
. ' constitution, to these, hills of banks.?
r There were two forms of hills of credit
:* | recognized in legislation, speech, nn<
; writing, namely, 'government bills o
I credit' and 'bank bills of credit.'
; It seems difficult to conceive how thesi
? two species of the same generic thin/
f came to be considered so far different a
. i that one should he constitutional and th<
f other not. To be a legal tender is not o
the essence of either; that is, each hai
in.un iwMic.I extensively without being dc
j clared a legal lender; and in nil olhc
- 1 re^cels (I)f.y are in effect and miscbie
he samp ; tending in the same way to
;xce<s, a'i'ce usurping the place of money, S
j oducing the same disorders in the cur- tl
cney, and having the same deleterious h
nlluence over the relations of labor and s
.p/MAort t* n
And it would seem to bo a strange an- p
unaly of the fundamental law, or, if not ?
inomaly, then oversight, to provide that r
i Stats shall not issue hills of credit bv I
the instrumentality of a legal person call f
id its treasurer/ but may by means of a s
legal person called its bank;" in other \
words, that it cannot, and vet t ha * it can, j
be the derivative source of th; issue of ; I
bills of credit. J;
Nor does it vary the principle, to enact ,
that the hank shall consist in part, or in
whole, of incorporated privatcs'.ock. This ;
appears by the practical fact of the times.
Most ot the hanks in the United States,
south of New York, have ceased to pay
their bills in cash, a large part of them
having failed to make any effective redemption
for the space of more than four
years. Their bills arc an irredeemable
paper currency. And their continued ir1
L.I.*.. U?., lv?on lorrn li '/n/i hv Staff! I
1 II CfWlIIUl ISOUIIIU ????v? y* , ...... h;
mass of individuaI indebtedness of the
| People of iho United States, which now
weighs thorn down, and is one primary
evil of their present condition; debts contracted
when the currency was execs ;;v >.
for things having a factitiously large or
wholly unreal value, and the possession
j of which by the debtor, owing to their
present depreciated value, affords to him
no adequate means of payment. What
alone Congress can directly do in this respect
it has done, by the passage of a
bankrupt law, which, whether rightful or
r not in its provisions, yet enables the insolvent
debtor to settle these debts with
1 such means of payment ns ho possesses
For the rest, and so far as this indebtedJ
ness is a general evil affecting the whole
j country, * therein the patient must minis.
. * - ... i :?..ir" 'Pi-,.. rpmcilv. and the
I ILT lu (li:il3Vll? M iiu I ,
only remedy, is industry, economy, and
prudence, and a return to proper principles
of trade; by means of which, and
| with the immense and various productive
| resources of the country, and the produc.
tive energy of its people, with no e.xtran(
. eous cause of war or the like to waste
and exhaust them, tiie speedy return (r
| our accustomed prosperity is as certain
j ! as any tiling in human a flairs can lie.
It cannot, by any direct legislation,
j i prevent unwise extension of credit in timi
or amount, overtrading, speculation, th<
excessive importation and consumption ol
. foreign luxuries, and the consequent excess
of imports over exports, and displace,
menl.s of coin to pay foreign balances,
I What alone it can do in this respect, be
, ! sides itseif setting an example of integrity
f and frugality in its own affairs, is to reg
* | ulato in its own affairs its owi
system of taxation ar.d finance si
as at any rate not to injure the domestic
; ' production of the country, and, if it may
- i
I I incidentally to foster it impartially in ni
, ; its forms, and do equal justice to the right;
^ and interests and interests alike of al
parts of the Union,
j it cannot assume and pay the debt
which the individual States have contrac
ted on their own account. All that it
this relation it can assume to do it ha.
(whether rightfully or not)done, by ce
* ding to thc#Stat: s the annualjnett p ocerd
of the public lands. For the rest, tlx
1 Q! u'fm arn alsi
j- people CM IMU UIIIIC1I uiwikj, _
j the People of the States, have th.i romcd;
(for this evil in their own han Is l>y t hi
; better regulation of their own finances
r' p i
j. and the imposition of taxes to pay t?*<
interest of their public debts.
reneem.iuiuiy u.u? i/cm .....w
Legislatures, in many instances, > * the '
means of procuring to the use of the State !
Government an issue of hills of credit
with which to defray the charges of the!
Stale, instead of levying taxes on the in- j
habitants for that purpose. The State
cannot issue bills of credit by its. (rcasu. |
rer; hut it can and does by its hanks; [
which is one great cause of the existing
disorders in the currency of the United
States.
Tims, of the sovereign function to make
and regjilate money, (or its substitute,)'
the State Governments (whether by us- f
urpatron or constitutionally is immaterial
to the result) possess a part fr? common
with the Federal Government
And this fs the radical dittrcuftv in the
whole of the currency. For if the sta'e
have the power so to issue hank hills of
credit then the Federal Govornin nrtcani?ot
(hv any direct legislation) prevonf
their issue, and of course cannot (by any
direct legislation) apply a cure to the inherent
chronic disease of the paper circu
hi ion of the United Stales. Whether j
it may administer any indirect remedy |
will Ire seen hereafter.
It is of the power and dirty of th* F?d- j
feral Government, in the first placed, to j
provide for itself a safe and suitable fiscal
agent to receive, keep, and disburse the '
public moHoy. This it does under the
tax power and other powers of tiro Con.
stitution.
The Federal governmeat has, in the
scccond place, under more than one
clause of the Constitution, certain powers
to exert and duties to diseii irge concerning
the currency of the United Slates.
In what way shall Congress exercise
these powers and discharge these duties ?
| If the duty of the Federal Government
] consisted only in doing what is absolutely
' necessary for itself in n fiscal point of j
1 view, and stopped there, the question
; might he more easily*answered, lint in I
! the opinion of the Cornnjitt?*e, the Fedcral
Government should consider, net only
what is for the convenience of itself, but
also, incidentally, what is for the convenience
and welfare of the People of the
United States.
In the first p'ace, then, what cannot
and what can the Federal Government at
this tiinedo, to remedy and relieve the
currency difficulties of the United States?
f. ?. ? ,,that orrraf
ft cannot command and compel th^
Itate Legislatures to cense to nuthorize
tie suspension of cash payments by their
anks, nor prevent those "banks from is?
uin? bills of credit to accommodate the
resent wants and postpone the final
ayday of individual debtors or of the
Slates. It cannot, by its own direct act,
ctire from circulation, their depreciated
>ills, the currency of which is Ilia greatest
svil of the times. Hut it can act on the
ubject.matter hy the refusal to receive or
..... ?i.:? i ? .# ....
j'v. ?*u_v uiiug i u cmii or r(|invoic i? j"?"
jcr in its own dealings, and if it receive
Dank bills, by exacting payment of lliem
it frequent specific 1 periods. And in ?he
opinion of many, who arc conversant
with the subject, and whose experience
and judgment are entitled to consideration
it can, to some degree, remedy the disorders
of the currency, by applying to legs/ .
or art ficial person* the saine laws for the
immediate distribution of their assets and
discharge of their.debts, which apply to
natural persons.
It cannot give lo the country a paper
currency in the bills of an incorporated
joint-slock bank of private stockholders;
Ibr the const it u i uial opinions of the President,
and of considerable part of the
i s* . i r ? i # .1
tnemoers 01 me two nouses, una or mo
People at largo, constitute at present an
insuperable Impediment to the incorporation
of a national bank; and.it it could
bo incorporated, it would be impossible,
and if possible, would aggravate rattier
than lighten existing evIU, to collect the
stock of such an institution. It can,
however, provide a national paper cur.
rency of adequate quantity, arxl of tetter
quality, by other weans,
it cannot equalize t!?e exchanges
throughout the country, ho long as the
currency of most parts of it consists of
irredeemable bank Kills in various degree* ^
and stages of depreciation and the business
of buying and selling is transacted irr
one part of ibe country by means ofspecior
values, and in another by paper values,
VIo?t of the existing rate of exchange between
different parts of the country irf
not the difference in price between legal
rob in one place nnrl legal coin inanoth.
or, or of tbc cost ot 'ransporting it to settle
balances, but the dilf.Tence between
the p. ice of ll>e coin currency and the pape
currency at tIke same place. This Congress
cannot prevent. But it may provide
a safe and economical incrlhirmof exchanges,
correspondent to the true value
exchange as regulated by the couvso of
business, according to supply end demand
in a specie medium of payment.
It cannot, by any act of its own whatever,
proceed rmmedbtlely to fill the channels
of commerce with a paper ciwrency
equal in rate of value to gold and- wifver,
neithe r by means of a national bank nor
by any olber instrurnenfafity whatever.
! For the same reason that, in the market
of a depreciate I |>?per currency, com
cannot be kept in circulation, but become*
at once an urticleof merchandise, and i*'
bought up as8i!ch, and disappears, just so
will it always be with a specie value
paper cuirency alongside ofa depreciated
pip r currency. Until State Government*
cease to authorize or sanction the issue
of irred-. emab'e bank paper in a g ven
community, that community cannot have
any better currency. Hut the Federal
Government can a lopt lb mean* to fur.
nisli a paper currency of par value, to ba
ready to take the place of the depreciated
paper currency, so soon as that shall be
driven or withdrawn from circulation by
the direct action of tho State Governments,
or by the indirect action of the &
Federal Government.
What, then, shall Congressdo? What
ought it do? To roach the answer to
these questions, lot its consider the advantages
and the disadvantages ofthe plan*'
heretofore used in the"^i?cal business of
the Treasury.
Leaving out ofthe case all debatable
, constitutional questions involved in it, and
regarding it as a practical .matter
only, the considerations alleged in favor
of a national bank are?
1. ft* convenience in the collection,
safe-keeping, and disbursement of the
revenue.
2d. Its utility (ton certain degree) as
an agent of exchange.
3. Its bring tiro means of furnishing a
paper currency to circulate in all parts of
the United States.
3. Its instrumentality, by the periodical
- " " #tv*
settlement 01 naiances, in regumuu^ i..?
paper currency qf the Stale*.
5. Its being the means of utilizing the
j public depositcs by discounting on them.
, On the other hand, the practical objcc.
, lions to it are, in substance?
1. The peril to the public welfare of
taking from the Government itself, api
pointed by the people and responsible to
; them, nil this vast power over the public
F fundsand the currency and exchanges,
and placing it for a long period of years m
the hands of a private corporation, and of
bank directors, having interests of tfrerr
own, and irresponsible and inaccessible
to the people themselves.
2. The chances of mismanagement
1 and corruption on the part of such a cor?
1 poration, in the ratio of its power.
; 3. 'Hie possibility that it rntuy UeeHf
' make excessive issues, on suspend pay-v
'; mcnts in specie, and', i-nsiead of aiding to
4 1 regulate the currency of the States, he-.
' como itself the great cause of derangement.
4. That it is no, part of the proper business
of the Federal Government to carry
1 on (directly or indirectly) the business
3 - tna ?r hill*. or otherwise
ol fliscounring m??.?
. lending money, or to furnish funds to be
3 so lent.
y Concerning the ndnption of the fltato
y banks a* the fiscal agents and depositors
B of tho Federal Government, the main
r consideration f ?r it is?
e Thai, if there be no national bank, it
is necessary to employ the banks of the '.. v
l ' ~-?&f